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Does the sequester that took effect Friday mean the federal government is really downsizing? If Uncle Sam Inc. were a publicly traded stock, Wall Street would probably react to the news with a mixture of scorn and indifference.

There will be cutbacks in certain operations, especially in defense. But the cuts will be more than offset by an increase in entitlement spending. Total outlays will still show a small increase, to a record $3.553 trillion in fiscal year 2013, versus $3.538 trillion in fiscal 2012.

And over the next decade, the sequester will barely make a dent in the Congressional Budget Office's projections that debt as a share of GDP is inexorably climbing toward 200% from its current 76% (see my cover story, "Next Stop, Greece," Feb. 18).

Those who believe in the potency of fiscal policy, however, use different math.

The budget deficit, the difference between revenues and outlays, will be smaller in 2013 than in 2012, and that could be a drag on economic growth. The deficit in 2013 is projected at $845 billion, down from $1.089 trillion in 2012, finally breaking the four-year run of trillion-dollar-plus deficits that began in 2009.

That might sound like progress to some, but it's bad timing to others, given that economic growth is already quite sluggish. As a share of current-dollar gross domestic product, the deficit will decline to 5.3% in 2013 from 7.0% in 2012, a fiscal tightening of 1.7 percentage points that is regarded as worrisome by some.

But when the "fiscal cliff" was looming, the fall in the deficit was projected at 3.3 percentage points, or nearly double the 1.7 points now expected. And even then, historical precedent revealed that even a mild recession might not be imminent (see "Cheer Up! The Cliff Doesn't Look So Grim," Dec. 31). For this 1.7-point decline, the most recent precedent is 1987, when the deficit as a share of gross domestic product fell 1.8 percentage points from the previous year's level. Somewhat perversely from a fiscal-policy point of view, economic growth that year quickened, rather than slowed. On a fourth-quarter-over-fourth-quarter basis, real GDP rose 4.3% in 1987, versus 2.8% in '86.

For two other precedents, in the 1950s, we get mixed results. In 1956, the budget ran a surplus of 0.9% of GDP, a 1.7-point swing from the 0.8% shortfall of the year before. The 1.7-point fiscal drag coincided with a major slowdown in real GDP growth, just as the fiscal policy advocates would have expected. But in 1956, there was also a noticeable hike in the short-term interest rate by the Federal Reserve, which might have been the real factor that slowed economic expansion in that year. In 1954, just as in '87, a 1.4-percentage-point fall in the deficit coincided with a pickup in growth.

The historical record leads us to believe that, at the very least, the outcome could go either way. But then it might be argued, why not be safe rather than sorry? In an ideal world, it might be prudent to wait until growth looks more robust before making even these puny cuts in federal spending.

But in this world, it's difficult enough to impose any cutback in spending by the government; the circumstances that led to the sequester might not come around again. (Will the cuts stick? See D.C. Current.)

These reductions aren't much, but they're a start. As Rahm Emmanuel once famously said, "You never want a serious crisis to go to waste. And what I mean by that is an opportunity to do things you think you could not do before." Right on, Rahm.

SPEAKING OF THE SERIOUS and scary crisis I wrote about in the above-mentioned Feb. 18 cover story, many critics took me to task for not being scary enough. Some thought I understated the extent of U.S. indebtedness.

The debt figure I used is called "debt held by the public," of which nearly half is in foreign hands. It is projected to run to $12.2 trillion by the end of fiscal 2013. The figure preferred by the critics is "gross public debt," projected at $17.1 trillion, a number that includes the approximately $5 trillion held in the government's "trust funds."

I prefer to use debt held by the public because it comes closer to reflecting the pressure of creditors on the U.S. Treasury. Besides, gross public debt isn't nearly gross enough, since the trust funds don't even come close to measuring the unfunded liabilities incurred by elder-care entitlements. Going out to 2043, my projections covered all the payouts that have to be made for entitlements, as the debt held by the public grows to 200% of GDP.

Just as with a household, as yearly deficits accumulate, the debt outstanding rises. To pay down these obligations, you need surpluses, as Bill Clinton and Al Gore once were fond of pointing out.